Often the terms economic growth and economic development are used
interchangeably as if they were synonymous, but there is a big distinction
between them. Economic growth refers to the increase in an economy's real
gross domestic product (GDP) and income over time. Real GDP is the
economy's total output of goods and services, usually measured over a period
of one year. The amount of achievable economic growth would depend on the
human resource acquisition of the economy, technological improvement, amount
of capital investment, natural resource endowment and degree of its exploitation,
and the managerial know-how existing in the economy.

Economic development, however, must be preceded and prompted by
economic growth. To reflect economic development, economic growth is defined
in terms of increases in per capita real output or per capita income. Development encompasses the process through which societies, or nations, or regions,
raise their per capita output and income by improvements and increases in
productivity, and how these translate into per capita economic well-being in the
society.
1 Economic development involves economic growth accompanied by structural transformation, that is, economic growth plus (positive) structural
changes in the economy. Thus, economic growth may be seen as necessary, but
not sufficient, for economic development. Structural transformation provides the
sufficiency condition for economic development. We now examine in turn, these
two conditions of economic growth and structural change, to enable us to
provide a complete and precise understanding of economic development.

THEORETICAL FORMULATION OF ECONOMIC GROWTH

Economic growth may be regarded as a steady increase in national income
and per capita income of the society over time. Before we move to consider
practical quantifications and measurement of economic growth, it will be helpful

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